APRA Amends Prudential Standards in Line with CPS 320 and GPS 340
APRA issued a letter to all general insurers, life insurers, and private health insurers proposing minor changes to the prudential framework to implement the cross-industry appointed actuary standard. APRA is making amendments to thirteen prudential standards to reflect consequential changes arising from the introduction of the new Prudential Standard CPS 320 Actuarial and Related Matters (CPS 320) and Prudential Standard GPS 340 Insurance Liability Valuation (GPS 340). APRA intends to finalize the revised standards in April 2019. The standards will commence on July 01, 2019.
The changes primarily replace references to revoked standards, update references from Insurance Liability Valuation Report (ILVR) to Actuarial Valuation Report (AVR), streamline clauses regarding exercises of discretion by APRA under previous prudential standards, delete outdated transitional provisions, and correct typographical errors. The following prudential standards are being amended:
- CPS 220 on Risk Management
- CPS 510 on Governance
- GPS 110 on Capital Adequacy
- GPS 112 on Capital Adequacy Measurement of Capital
- GPS 113 on Capital Adequacy Internal Model-based Method
- GPS 114 on Capital Adequacy Asset Risk Charge
- GPS 115 on Capital Adequacy Insurance Risk Charge
- GPS 116 on Capital Adequacy Insurance Concentration Risk Charge
- GPS 118 on Capital Adequacy Operational Risk Charge
- GPS 120 on Assets in Australia
- GPS 310 on Audit and Related Matters
- HPS 310 on Audit and Related Matters
- LPS 700 on Friendly Society Benefit Funds
For general insurers, three minor changes to GPS 116 will also be made to reflect the current definitions and expectations of APRA. The revised GPS 116:
- Removes reinsurance premium protection and capital market structures from the definition of alternative capital and risk mitigants in paragraphs 54 and Attachment B, paragraph 13, as these types of arrangements are more aligned with traditional reinsurance
- Clarifies expectation that the Appointed Actuary include both details of the determination of the net premium liability provision which relates to catastrophic losses (the PL offset) for the reporting year and the estimated PL offset to be utilized in the upcoming year in the AVR
- Continues the existing requirement that the Group Actuary provide the board of a Level 2 insurance group with an opinion on the Insurance Concentration Risk Charge whenever substantial changes are made or at least annually (at Attachment B, paragraph 18)
Related Links
Keywords: Asia Pacific, Australia, Insurance, Actuary, CPS 320, GPS 340, Risk Management, Capital Adequacy, Governance, APRA
Featured Experts

María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer

Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
HKMA Publishes CoP on Loss-Absorbing Capacity Requirements of BanksRelated Articles
FED Revises Capital Planning and Stress Testing Requirements for Banks
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
ECB Releases Results of Bank Lending Survey for Fourth Quarter of 2020
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
ESAs Publish Reporting Templates for Financial Conglomerates
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.
EBA Publishes Report on Asset Encumbrance of Banks in EU
EBA published the annual report on asset encumbrance of banks in EU.
MAS Revises Guidelines on Technology Risk Management
MAS revised the guidelines that address technology and cyber risks of financial institutions, in an environment of growing use of cloud technologies, application programming interfaces, and rapid software development.
US Agencies Publish Updates for Call Reports, FFIEC 101, and FR Y-9C
FED updated the reporting form and instructions for the FR Y-9C report on consolidated financial statements for holding companies.
EBA Proposes Guidelines for Establishing Intermediate Parent Entities
EBA issued a consultation paper on the guidelines on monitoring of the threshold and other procedural aspects of the establishment of intermediate EU parent undertakings, or IPUs, as laid down in the Capital Requirements Directive.
EC Adopts Financial Reporting Changes Arising from Benchmark Reforms
EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.
BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk
BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.
HMT Updates List of Post-Brexit Equivalence Decisions in UK
HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.